High Rates, Low Inventory Still Negatively Impacting Palm Beach Area Home Sales in June

High Rates, Low Inventory Still Negatively Impacting Palm Beach Area Home Sales in June

Residential News » Palm Beach Edition | By Michael Gerrity | August 7, 2023 8:41 AM ET

According to the Miami Association of Realtors, Palm Beach County total home sales decreased 3.4% year-over-year in June 2023 because of elevated mortgage rates and lack of supply in certain price points.

Palm Beach area single-family home sales decreased 3% year-over-year, from 1,472 in June 2022 to 1,428 in June 2023 because of its comparison to a historic month and the current market has lower inventory in specific price points and higher rates.

Palm Beach area existing condo sales decreased 3.8% year-over-year to 1,204 in June 2023.

Yet, Palm Beach County single-family home new pending sales rose year-over-year as total South Florida showing appointments rose once again, according to June 2023 statistics released by the MIAMI Association of Realtors (MIAMI) and the Multiple Listing Service (MLS) system.

Palm Beach County single-family new pending sales increased 2.1% year-over-year in June 2023 to 185 transactions. South Florida showing appointments, meanwhile, increased 7% year-over-year, from 218,973 to 233,675. It is the second consecutive month showing appointments have risen year-over-year.

Palm Beach County luxury $1-million-and-up condo sales increased 34.4% year-over-year in June 2023 to 125 transactions. Palm Beach County single-family luxury sales decreased 4.4% to 329 transactions.

Most of the homes purchased in June 2023 came to terms in May when mortgage rates peaked at 7.14%. Rates, in comparison, were at 5.27% on May 5, 2022.

Home sales are sensitive to mortgage rate changes. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.96% as of July 13. That's up from 6.81% the previous week and 5.51% one year ago.

"Buyers seem to be adjusting more quickly to the reality of higher mortgage payments than sellers, making that home purchase if it is affordable," Miami Realtors Chief Economist Gay Cororaton said. "Buyers continue to compete for the limited supply, so we're seeing a market with prices still buoyed up by demand, modest price discounts, and properties still typically getting sold within a month."

Palm Beach County single-family home median prices increased 0.8% year-over-year in June 2023, increasing from $620,000 to $625,000. Existing condo median prices increased 4% year-over-year to $325,000 from $312,500.

Home prices are determined by supply and demand. Lower supply and higher demand create higher prices. Inventory for Palm Beach single-family homes (3 months) and condos (3.6 months) are low. Also, one of the supports for home prices is rents and rents are up.

While housing inventory is rising, current inventory is at 7,089. Total active listings at the end of June increased 21.6% year-over-year, from 5,829 to 7,089.

Inventory of single-family homes increased 2.2% year-over-year in June 2023 from 3,421 active listings last year to 3,497 last month. Condominium inventory increased 49.2% year-over-year to 3,592 from 2,408 listings during the same period in 2022.

New listings of Palm Beach single-family homes decreased 32% to 1,555 from 2,286 year-over-year. New listings of condominiums decreased 22%, from 1,707 to 1,331 year-over-year.

Months' supply of inventory for single-family homes increased 30.4% to 3 months year-over-year, which indicates a seller's market. Inventory for existing condominiums increased 111.8% to 3.6 months, which also indicates a seller's market. A balanced market between buyers and sellers offers between six- and nine-months supply.

Palm Beach total dollar volume totaled $2.1 billion in June 2023. Single-family home dollar volume decreased 12.55% year-over-year to $1.5 billion. Condo dollar volume increased 9.21% year-over-year to $662 million.

Only 0.6% of all closed residential sales in Palm Beach were distressed last month, including REO (bank-owned properties) and short sales, lower than 0.4% in June 2022.

Short sales and REOs accounted for 0.2% and 0.5% year-over-year, respectively, of total Palm Beach sales in June 2023.

Palm Beach's percentage of distressed sales are on par with the national figure. Nationally, distressed sales represented 2% of sales in June, virtually unchanged from last month and the prior year.

Cash sales represented 51.4% of Palm Beach closed sales in June 2023, compared to 54.3% in June 2022. About 26% of U.S. home sales are made in cash, according to the latest NAR statistics.

Cash sales accounted for 61.4% of all Palm Beach existing condo sales and 42.9% of single-family transactions.

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